Momentum 1 is a short-term trend momentum strategy.
Short-term means that this strategy can enter and exit several trades a
day. It is a trend momentum strategy because it buys only when the
Schaff Trend Cycle (‘STC’) is rising and sells only when the STC is
falling. The strategy exits a trade when trend or price momentum slows
For example, MOM 1 will buy into an uptrending market as it
accelerates. And it will exit that trade when the speed of the uptrend
slows down. The reverse holds true for a sell trade. MOM 1 will sell
into a downtrend as it accelerates. It will exit a sell trade when the
speed at which prices are falling slows down.
Indicators used in this strategy & their inputs:
Schaff Trend Cycle - STC(5,7,13)
Simple Moving Averages – Two Lines, SMA(3) and SMA(5)
FXS Trend Oscillator - TrendOscl(2)
strategy uses a fast moving Schaff Trend Cycle (‘STC’) on a 1-Hour
Chart to indicate Trend. The STC moves between 0 and 100. Trend is the
direction of the “fast” STC.
UP: Trend is considered to be UP when the STC is rising or at 100.
Chart 1. Momentum 1 uses three strategy indicators.
DOWN: Trend is DOWN if the STC is falling or is equal to zero.
strategy uses two fast moving Trade Entry indicators to fine-tune when
to buy or sell: Simple Moving Averages – Two Lines and the FXS Trend
The moving averages are considered bullish
when the faster black SMA(3) is rising and above the green SMA(5), and
bearish when the SMA(3) is falling and below the green SMA(5).
Trend Oscillator crosses above and below zero. The green ‘TrendOscl(2)’
line is bullish when it is above zero and rising. It is considered
bearish when it is below zero and falling.
Chart 2. A Buy Entry occurs at 1.4186, at 8:00, when all three strategy indicators became bullish.
Here are the Buy Entry and Sell Entry rules:
BUY when Trend is UP and:
1. The black SMA(3) above the green SMA(5) and
2. The green Trend Oscillator line is above zero and rising
SELL when Trend is DOWN and
1. The black SMA(3) is below the green SMA(5) and
2. The green Trend Oscillator line is below zero and falling
Various exit tactics are used, depending on how price could develop.
1. Exit Buy Position if price trades at Key Resistance target and TrendOscl crosses below zero.
2. Exit Sell Position if price trades at Key Support target and TrendOscl crosses above zero.
Strategy Indicators Changes Direction:
the Trend Indicator changes direction then exit the trade. If both of
the Trade Entry indicators change direction then exit the trade.
Chart 3. Buy Trade exits after Trend changes to DOWN.
Exit a BUY Position if
1. Trend changes to DOWN
2. Both Trade Entry indicators change to Bearish
Exit a SELL Position if
1. Trend changes to UP
2. Both Trade Entry indicators change to Bullish.
Initial Stop Loss Order: Controls trade risk. Establish before the trade.
--- SBJ – by: Fx Strategy --------